More dirt emerges from bank at heart of deputy CJ Mwilu's woes

More dirt has emerged from the bank at the heart of Deputy Chief Justice Philomena Mwilu’s troubles — and which point to an institution not only used as a conduit by its directors to siphon money from customers, but where illegal withdrawals were done even after it went under.

The bank has been in the news after the Director of Public Prosecution decided to charge Justice Mwilu for “inducing the receiver manager”, Kenya Deposit Insurance Corporation (KDIC), to part with some land security and for "abuse of office" by using her position to get favours from the controversial bank.

Justice Mwilu was arrested two weeks ago on suspicion of receiving a Sh12 million bribe from the lender, forgery and tax evasion, alongside her lawyer, Mr Stanley Muluvi. Their prosecution has, however, been stopped by the High Court, which will on October 9 give her a hearing.

Recently filed court papers — in a different case — indicate that despite being placed under receivership, money was still withdrawn from some suspicious accounts at the centre of the Sh20 billion investigations.

ILLEGAL WITHDRAWALS

This is an indication that KDIC officials may have aided in illegal withdrawals, or that some individuals have a back door to the lender’s financial systems.

The total amount paid out after receivership is yet to be disclosed.

The KDIC CEO, Mr Mohamud Ahmed Muhamud, says in court papers that Imperial Bank’s directors benefited from money withdrawn after receivership, even as the bank fights to secure two prime properties in Nairobi and Mombasa which house the bank’s headquarters. The two are deceptively owned by two companies associated with former shareholders.

While the bank is now set to be sold to KCB, after its bid was allowed by the Central Bank, a new saga has emerged about these two prime properties — an indicator of the mess that was within the troubled bank.

SHAREHOLDERS PAID DIVIDENDS

The Central Bank believes these two assets owned by Upperview Properties Ltd and Sandview Properties Ltd for the Nairobi and Mombasa offices, respectfully, were built after Imperial Bank’s seven shareholders were paid dividends after a 2009 book cooking which indicated that the bank had made Sh556 million profit.

Although the dividends were used to purchase and build the properties housing the Nairobi and Mombasa head offices by the two real estate firms, the buildings were leased to Imperial Bank.

Curiously, court papers show, Sandview and Upperview senior employees were also working at Imperial Bank. The lender’s chief finance officer, Mr James Kaburu, risk manager Robinson Boreh, and two others identified as Charles Muriithi and Fozia were holding three jobs and drawing salaries from the three firms.

While Mr Kaburu’s Imperial Bank salary is not disclosed, he was earning Sh50,684 from Sandview and Sh49,315 from Upperview every month. Mr Boreh got Sh20,004 from Sandview and Sh19,463 monthly from Upperview.

LONG TERM LOAN

The records indicate that on March 16, 2015, Upperview Properties lent Imperial Bank Sh247.5 million, which was recorded as a long term loan.

Two weeks later, Mr Kaburu, in his capacity as an Upperview Properties manager, wrote a letter to Imperial Bank’s finance manager asking for remittance of interest on the loan to Sandview properties.

But being the chief financial officer at Imperial Bank, Mr Kaburu was essentially writing the letter to himself. Why the money was to be paid to a different company is not clear.

“Mr Kaburu states (in the letter) that the loan was available from February 24, 2015, when the payment voucher shows that payment was made to IBL on March 16, 2015. He further asks that interest payment due to Upperview should be paid into the Sandview Properties Ltd bank account, yet Sandview had not disbursed any money to Imperial Bank,” Mr Mohamud adds in his affidavit.

FROZE ALL ASSETS

Mr Kaburu has been seeking to lift an order that froze all his assets and bank accounts, and lays blame on the late managing director, Mr Abdulmalek Janmohammed, for the financial mess that took place at the bank.

The Imperial Bank saga is emerging to be a complex case of heist within a bank — and which was done with the connivance of its managing director, Mr Janmohammed, and his senior officials.

Interestingly, it is the bank officials who blew the whistle on the bank shortly after their boss died. Whether they wanted to pin all dirt on him is not clear but it is now known that on October 12, 2015, three Imperial Bank directors walked into Central Bank deputy governor’s office holding a preliminary report by London’s FTI Consulting which showed that Mr Janmohammed had looted Sh20 billion from depositors.

At the time, Central Bank of Kenya (CBK) Governor Patrick Njoroge was out of the country on official duty, and the Imperial Bank team secured a meeting with deputy Sheila M’Mbijjewe.

STEAL FROM DEPOSITORS

The three directors led by Anwar Hajee, explained that after Mr Janmohammed died on September 15, two of the bank's senior staff — head of credit Naeem Shah and chief finance officer James Kaburu — confessed to helping their deceased boss steal from depositors.

Court documents do not, however, reveal which of the other directors accompanied Mr Hajee to this meeting with CBK officials.

Besides Mr Janmohammed, other Imperial Bank directors were Alnashir Popat, Vishnu Dhutia, Jinit Shah, Hanif Mohamed Amirali Somji and Mukesh Kumar Patel. Each of the directors held their positions in trust for other companies they co-owned.

Also in this meeting was FTI Consulting managing director David Morris, who helped explain the situation based on preliminary findings.

The Imperial Bank team pointed fingers at Mr Janmohammed, former head of credit Naeem Shah, who was promoted to managing director before receivership, and ex-chief finance officer James Kaburu, who had become Mr Shah’s deputy.

SUSPICIOUS ACTIVITY

Mr Hajee told the CBK deputy governor that after Mr Kaburu confessed to aiding the scheme, the board of directors hired FTI Consulting to investigate the claims.

In one of his affidavit, Mr Kaburu claims that when he, for instance, noticed suspicious activity on W.E Tilley’s account, he approached Mr Janmohammed over it.

“But when I confronted Mr Janmohammed, he informed me that the said account was proper and that I liaise with Mr Naeem Shah, who was then head of credit. When I raised the matter with Mr Shah, he said all the procedures and documentation were proper as regards the account,” Mr Kaburu held.

It was claimed that Mr Janmohammed, Mr Shah and Mr Kaburu stole from depositors through a complex off-the-books loan scheme which they hid by moving money through depositors’ accounts. Mr Janmohammed also manipulated the lender’s record keeping software to avoid detection.

TRAVEL COSTS

It was also claimed that some CBK officials aided the scheme, in return for favours. So far, a former CBK governor has featured prominently, having enjoyed travel costs and holidays paid for by Mr Janmohammed.

The following morning, after that meeting, CBK announced that it had placed Imperial Bank under receivership.

The Kenya Deposit Insurance Corporation (KDIC) was appointed receiver manager, and it opted to retain FTI Consulting as forensic auditor to trace beneficiaries of the in-house heist that had run for at least 13 years.